Reply SpA

Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Annexed tables
Note 35 - Additional disclosures to financial instruments and risk management policies
Types of financial risks and corresponding hedging activities
Reply S.p.A. has determined the guide lines in managing financial risks. In order to maximize costs and the resources
Reply S.p.A. has centralized all of the groups risk management. Reply S.p.A. has the task of gathering all
information concerning possible risk situations and define the corresponding hedge.
As described in the section “Risk management”, Reply S.p.A. constantly monitors the financial risks to which it is
exposed, in order to detect those risks in advance and take the necessary action to mitigate them.
The following section provides qualitative and quantitative disclosures on the effect that these risks may have upon
the company.
The quantitative data reported in the following do not have any value of a prospective nature, in particular the sensitivity
analysis on market risks, is unable to reflect the complexity of the market and its related reaction which may
result from every change which may occur.
Credit risk
The maximum credit risk to which the company is theoretically exposed at December 31, 2010 is represented by
the carrying amounts stated for financial assets in the balance sheet.
Balances which are objectively uncollectible either in part or for the whole amount are written down on a specific
basis if they are individually significant. The amount of the write-down takes into account an estimate of the
recoverable cash flows and the date of receipt, the costs of recovery and the fair value of any guarantees received.
General provisions are made for receivables which are not written down on a specific basis, determined on the basis
of historical experience.
Refer to the note on trade receivables for a quantative analysis.
Liquidity risk
Reply S.p.A. is exposed to funding risk if there is difficulty in obtaining finance for operations at any given point
in time.
The two main factors that determine the company’s liquidity situation are on one side the funds generated by or
used in operating and investing activities and on the other the debt lending period and its renewal features or the
liquidity of the funds employed and market terms and conditions.
As described in the Risk management section, Reply S.p.A has adopted a series of policies and procedures whose
purpose is to optimize the management of funds and to reduce the liquidity risk, as follows:
centralizing the management of receipts and payments, where it may be economical in the context of the local civil,
currency and fiscal regulations of the countries in which the company is present;
maintaining an adequate level of available liquidity;
monitoring future liquidity on the basis of business planning.
Management believes that the funds and credit lines currently available, in addition to those funds that will be generated
from operating and funding activities, will enable the Group to satisfy its requirements resulting from its investing
activities and its working capital needs and to fulfill its obligations to repay its debts at their natural due date.
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